Depends on what you want to do with the photos.
If all you want to do is take snapshots, then 2-4 megapixels is fine, and you don’t need to spend any more than a couple hundred dollars on a camera.
If you want to post photos on the web, again, 2-4 megapixels is fine.
If you want to take photos for publication in print media, you’ll need at least 5 megapixels and the more megapixels the better. You’ll need at least 8 megapixels if any of the photos are to be full page and sharp.
The biggest problem with non-SLR digital cameras is lack of control of the image. For really close up shots, fast action shots, and so on, you really need the control an SLR gives you, with the multiple lenses, shutter and aperature control.
Only the digital SLRs give you fast shutter response when you press the shutter. Non-SLR digital cameras typically have a delay of half a second to 2 seconds when you press the shutter – which makes the cameras next to worthless for any action shots.
And all but the most expensive digital SLRs are NOT full 35mm frame, but instead are 2/3rd’s frame, making your standard 50 mm lense into more like a 75mm lense. You have to get really crazy low-end lenses, like 18mm (27mm equivalent) to get decent wide angle images with these cameras.
Full frame digital SLRs cost a fortune right now ($5,000 and up), and result in huge images, something on the order of 14 megapixels or so. But it is also true that these cameras are getting to the point that their resolution is BETTER than 35mm film.
Having said all this, going with an SLR digital camera offers many useful advantages. Doing light color balance with a digital camera is a dream come true. For the cost of about a dozen rolls of film, you can get a 1GB memory card that will hold 400 images at maximum resolution.
My typical approach is to take a round of photos, then when I get a moment I will scroll through them on the camera and delete the